This bold prediction isn’t pegged to anything TV stations might be doing. It’s more about their network TV affiliate associations.
Speaking at the MediaPost Outfront Forum on Wednesday, Adam Gerber, global chief investment officer at Essence, pondered a world where TV networks would be getting a 0.2 prime-time rating five years from now.
Considering broadcast erosion, and growing competition everywhere, that isn’t so farfetched.
In turn, ask the more serious financial question: How can legacy TV media companies continue to operate and fully monetize an expensive linear TV network?
Now full on to a broader context: What happens locally? Would you need as many as five network affiliates in certain DMAs? Then move on to a more obvious trend: Local TV marketers are already moving lots of money to local digital platforms.
For their part, TV stations have been trying to cope with digital realities, such as investing more in local TV news, and expanding news time periods.
In addition, as an industry, they are transitioning to a digital media-like new standard -- ATSC 3.0, which will make TV more interactive in a number of areas, as well as improve advanced advertising.
Also, they have been taking on more inventory to sell -- creating locally based ad sales businesses such as Tegna’s Premion, which give local marketers added reach -- packaging those ad avails with traditional local TV inventory.
However, it’s not just about national TV ratings declines -- local TV viewing is also sinking. And without big national TV shows on local TV stations -- due to perhaps fewer broadcast networks -- there will be even less viewership.
In the near term, the positive is that local TV ratings will still see big political TV dollars in the coming years -- especially those marketers attached to local TV news content.
Still, without any major TV network prime-time content, the financial equation will be challenging. Some TV stations were able to revamp into independent TV stations. But generally, this is rare.
Know this: Consolidation and/or transition is coming for linear TV, national and local. When will the lights turn off for some?
Wayne, Adam's tiny rating scenario for the broadcast TV networks would have to be based on a tremendous upsurge of channels or platforms supplying content. For example, many are predicting that the average streaming home will be paying for only 5-6 services by 2025 and at least three of these---maybe more----will be those operated by the "linear TV" networks. But even if "pay TV" shrinks to around 40% penetration you must add in rougly 15% more for over-the-air reception .So why would the broadcast network prime time ratings plummet to a tiny fraction of what they are now getting? Will the average TV home be receiving substantially more channels/platforms than the current average of roughly 160-170? Not likely. Indeed, it's possible that the number of channels per home may drop if the cable systems and telco distributors decide to trim their retransmission fees by eliminating many small and marginal cable programmers that are not tied in with the TV biggies.
So, yes, more rating declines are coming for the broadcast TV networks---as well as the cable channels and TV stations--- but there will come a point, where streaming looks an awful lot like "linear TV" does now---with many of the same shows appearing in both venues---and commercials,also. Which means that the big TV programming interests who are successful in their streaming ventures will have it both ways---with each method of access supporting the other in their business plans.